JOHANNESBURG, Sept 22 (Reuters) - South Africa's rand posted strong gains on Friday, as traders pushed out expectations for interest rate cuts in the wake of a hawkish monetary policy update from the country's central bank a day earlier.

       However, some analysts said the scope for further rand appreciation was limited before the mid-term budget on Nov. 1 given worries over the health of South African public finances.

       At 1236 GMT, the rand traded at 18.7775 against the U.S. dollar , about 1% stronger than its previous closing level.

       On Thursday, the South African Reserve Bank (SARB) left its main interest rate on hold despite inflation being firmly within its target, with analysts seeing a hawkish tilt to its statement which stressed that deteriorating public finances risked fuelling price pressures.

       Danny Greeff, co-head of Africa at ETM Analytics, said there had been a re-pricing of SARB rate cut risk.

       "The interest rates swaps and forward rate agreement curves have been steepening slightly after the SARB's meeting, pointing to a market that is pushing out expectations for eventual rate cuts. This suggests that South Africa's interest rate premium over funding nations will remain wider for longer, which will support capital inflows and the rand," he said.

       Rand Merchant Bank analysts said in a research note that risks to the rand were mainly tied to the country's fiscal position.

       "Seeing any meaningful appreciation ahead of the Medium-Term Budget Policy Statement in November is unlikely as investors wait for clarity," they wrote.

       On the Johannesburg Stock Exchange, the Top-40 index (.JTOPI) was up 0.7%. The benchmark 2030 government bond was weaker, the yield up 8.5 basis points to 10.650%.

       Reporting by Alexander Winning; Editing by Christopher Cushing and Sharon Singleton

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